Argentina is expanding its railroad network to cope with increasing demands for its growing export sector plus expectations of a boost in transit trade from landlocked Paraguay and regional commerce.

Swedish contractor Skanska is the latest international player in the expansion plans. Skanska said it will build a railway extension from the province of Neuquen to the Port of Bahia Blanca near Buenos Aires in a deal estimated at $134 million.

Neuquen city is an important agricultural center irrigated by the Limay and Neuquen rivers and a petrochemical industrial hub that receives oil extracted from different points of the province.

Bahia Blanca is an important trans-shipping and commercial center handling the large export trade of grain and wool from the southern area of the Buenos Aires province, oil from Neuquen province and fruit from the Rio Negro Valley.

Its group of sea ports is one of the most important in Argentina as the only ones that are naturally 33 feet deep, although the depth of the main channel is kept at 40 feet by regular maintenance.

Although Neuquen is served by existing rail, road and air networks, the construction of the new railroad network will facilitate economic growth in the region that lies halfway to the Chilean border, officials said.

An original railroad network in the country was built by the British-owned Buenos Aires Great Southern Railway company that initially built an extension to the Neuquen town in exchange for lands in order to populate the area.

Population in provincial capital Neuquen has been rising steadily as its energy sector grows and draws new investment from Argentine and international entrepreneurs.

Two Argentine companies, Chediak and Milicic, will be Skanska's partners in the joint venture with Potasio Rio Colorado S.A., a local affiliate of Brazilian mining company Vale. Skanska's share in the deal will be about one-third.

Argentina is one of 38 countries in which Vale operates. Skanska will be responsible for civil works including embankment, drainage and pavement on a 50-mile extension of the railway that also involves 29 bridges.

The project is to begin in February and will be completed in the first quarter of 2014, Skanska said.

About 600 workers will be involved once the project reaches its peak.

Skanska Latin America is one of the region's leading contractors. Its operations focus primarily on engineering, construction, operation and maintenance services for the international oil and gas, energy and mining industry.

In 2010, Skanska Latin America had about 10,000 employees and earned about $835 million.